Server and Tools Head Muglia Exiting Microsoft

Bob Muglia, head of Microsoft's Server and Tools Business, and one of four Microsoft presidents, will be stepping down.

The news arrived via a memo, dated Jan. 10, from Microsoft CEO Steve Ballmer to all employees, but the memo was broadly published. Muglia, a 23-year veteran at Microsoft, will leave his position by this summer and will help with the transition of bringing in the next head of Microsoft's Server and Tools Business.

Muglia can't exactly be said to have done a bad job at Microsoft. The Server and Tools Business segment delivered $4 billion in revenue for the company in first-quarter 2011 earnings, according to Microsoft's financials. As head of Server and Tools Business, Muglia had responsibility for the success of a number of flagship Microsoft products, such as the Windows Azure platform, Windows Server, System Center and Visual Studio.

It's not exactly clear if Muglia decided to leave or if he was asked to leave. The memo suggests actions by Ballmer to move Muglia out, based on the business cycle.

"Bob Muglia and I have been talking about the overall business and what is needed to accelerate our growth," Ballmer's memo states. "In this context, I have decided that now is the time to put new leadership in place for STB. This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles. Bob has been a phenomenal partner throughout this process, and he and his leadership team have the right strategy in place."

The spotlight hit Muglia in a glaring way at Microsoft's October PDC, where he made statements that called into question the future of Silverlight, Microsoft's multimedia platform. It appeared to be somewhat of a gaffe at the time, but questions about Silverlight's future have been implicit as Microsoft moved toward Internet Explorer 9 and support for HTML 5, which promises the ability to run two-dimensional graphics and video using standard markup, without relying on plug-ins such as Silverlight or Flash. Muglia apologized for his comments in a November blog post, explaining that Silverlight remains as a core Microsoft application development platform. Microsoft subsequently rolled out Silverlight 5 at a Firestarter event in December.

Microsoft's last big reorganization of Server and Tools Business happened in December of 2009, when Microsoft formed an internal Server and Cloud Division. Amitabh Srivastava was appointed back then to lead the newly formed division, reporting to Muglia. The idea of that restructuring was to align premises-based solutions closer to Microsoft's cloud efforts.

Of late, several key Microsoft leaders have left the company. Ray Ozzie, Microsoft's chief software architect, retired from that position in October while staying on for a short stint of providing advice on Microsoft's entertainment strategy. Stephen Elop, who oversaw Microsoft Office and SharePoint products, left Microsoft in September to join Nokia as CEO. In addition, key veteran leaders at Microsoft's Entertainment and Devices Division, J. Allard and Robbie Bach, left the company in May.

"Bob Mu's pending departure from Microsoft is, in my opinion, more significant in the near term than Ray Ozzie's departure last year," commented IDC analyst Al Gillen, program vice president for system software, in a Tweeted comment. Gillen clarified that Muglia was a key technical manager, and his position will be hard to fill.

"It's pretty hard for Microsoft to find somebody to fill Bob Muglia's shoes if they're looking for technical knowledge, familiarity with the products and the ability to interact with customers," Gillen said in a phone interview. "If you're looking for that, you don't get rid of Bob. I'm interpreting that to mean that Steve Ballmer thinks that he needs a different type of manager, not a technically adept manager."

Gillen added that Muglia had been on top of Microsoft's integration efforts with Windows Azure, but that sort of move involves a lengthy transition.

Microsoft is currently seeking out a replacement for Muglia. Ballmer stated that he is conducting both an internal and external search for the new president of Microsoft's Server and Tools Business.

Update: Muglia wrote his own memo about leaving Microsoft, citing teamwork and integrity. The memo was disclosed by Mary-Jo Foley here.